Ivanhoe Electric Inc 10-Q for FY2022 Q3

Ivanhoe Electric Inc. (IE)

10-Q 2022-11-14 For: 2022-09-30

Added on April 04, 2026

About this 10-Q

Ivanhoe Electric Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.18M; up 13.0% from $1.05M a year earlier
Net loss: $43.85M; compared with a net loss of $20.15M a year earlier
Diluted EPS: $0.43; up 53.6% from $0.28 a year earlier

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Delaware	32-0633823
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
606 – 999 Canada Place Vancouver, BC Canada	V6C 3E1
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	IE	NYSE American, Toronto Stock Exchange


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Condensed Interim Consolidated Financial Statements	3
	Condensed Interim Consolidated Balance Sheets	3
	Condensed Interim Consolidated and Combined Carve-out Statements of Loss and Comprehensive Loss	4
	Condensed Interim Consolidated and Combined Carve-out Statements of Changes in Equity	5
	Condensed Interim Consolidated and Combined Carve-out Statements of Cash Flows	6
	Notes to Condensed Interim Consolidated and Combined Carve-out Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION		27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	28


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	177,666	$	49,850
Accounts receivable		1,500		1,385
Inventory		6,141		5,878
Prepaid expenses and deposits		7,109		1,152
		192,416		58,265
Non-current assets:
Investments subject to significant influence		6,999		7,701
Other investments		1,621		1,802
Exploration mineral interests		84,744		73,039
Property, plant and equipment		3,670		2,523
Intangible assets		1,942		4,340
Other non-current assets		3,410		5,861
Total assets	$	294,802	$	153,531

Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	17,256	$	10,195
Deferred consideration payable		—		26,562
Lease liabilities, current		289		342
Contract liability		2,751		3,484
		20,296		40,583
Non-current liabilities:
Deferred income taxes		4,329		5,382
Convertible debt		25,398		78,832
Lease liabilities, net of current portion		928		55
Other non-current liabilities		363		865
Total liabilities		51,314		125,717

Commitments and contingencies (Note 15)

Equity:
Preferred stock, par value $0.0001; 50,000,000 shares authorized; none issued and outstanding		—		—
Common stock, par value $0.0001; 700,000,000 shares authorized; 92.9 million shares issued and outstanding as of September 30, 2022 (December 31, 2021 - 63.9 million)		9		6
Additional paid-in capital		407,203		75,743
Accumulated deficit		(162,520)		(52,314)
Accumulated other comprehensive income		(852)		(1,502)
Equity attributable to common stockholders		243,840		21,933
Non-controlling interests		(352)		5,881
Total equity		243,488		27,814
Total liabilities and equity	$	294,802	$	153,531


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue	$	1,181	$	1,045	$	8,172	$	4,099
Cost of sales		(875)		(531)		(1,042)		(1,172)
Gross profit		306		514		7,130		2,927

Operating expenses:
Exploration expenses		33,971		9,954		75,157		24,563
General and administrative expenses		6,853		7,888		16,738		14,108
Research and development expenses		1,140		1,007		3,728		2,719
Selling and marketing expenses		51		28		108		73

Loss from operations		41,709		18,363		88,601		38,536

Other expenses (income):
Interest expense, net		164		468		1,199		583
Foreign exchange loss (gain)		972		199		1,403		(155)
Loss (gain) on revaluation of investments		(171)		(17)		1,272		241
Loss on revaluation of convertible debt		—		200		18,965		200
Share of loss of equity method investees		1,527		—		3,077		—
Other expenses (income), net		(181)		983		1,401		561

Loss before income taxes		44,020		20,196		115,918		39,966

Income taxes		(167)		(48)		1,084		(232)

Net loss		43,853		20,148		117,002		39,734
Less loss attributable to non-controlling interests		(3,465)		(2,503)		(6,796)		(6,700)
Net loss attributable to common stockholders or parent		40,388		17,645		110,206		33,034

Net loss		43,853		20,148		117,002		39,734
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(990)		(204)		(949)		(6)
Other comprehensive income		(990)		(204)		(949)		(6)
Comprehensive loss	$	42,863	$	19,944	$	116,053	$	39,728

Comprehensive loss attributable to:
Common stockholders or parent		39,673		17,509		109,556		33,060
Non-controlling interests		3,190	$	2,435		6,497	$	6,668
	$	42,863	$	19,944	$	116,053	$	39,728

Net loss per share attributable to common stockholders
Basic and diluted	$	0.43	$	0.28	$	1.50	$	0.54
Weighted-average common shares outstanding
Basic and diluted		92,887,918		62,270,157		73,685,619		60,704,929


										Accumulated
				Additional						other
	Common Stock			paid-in		Net parent		Accumulated		comprehensive		Non-controlling
	Shares	Amount		capital		investment		deficit		Income (loss)		interest		Total
Balance at January 1, 2021	—	$	—	$	—	$	43,520	$	—	$	(1,538)	$	6,710	$	48,692
Net loss	—		—		—		(4,653)		—		—		(1,911)		(6,564)
Other comprehensive income (loss)	—		—		—		—		—		13		(5)		8
Net transfer from parent	—		—		—		5,606		—		—		—		5,606
Other changes in non-controlling interests	—		—		—		—		—		—		398		398
Balance at March 31, 2021	—	$	—	$	—	$	44,473	$	—	$	(1,525)	$	5,192	$	48,140
Net loss	—		—		—		(2,353)		(8,383)		—		(2,286)		(13,022)
Other comprehensive loss	—		—		—		—		—		(175)		(31)		(206)
Net transfer from parent	—		—		—		23,534		—		—		—		23,534
Restructuring upon spin off (Note 1)	59,909,344		6		65,648		(65,654)		—		—		—		—
Share based compensation	—		—		236		—		—		—		80		316
Other changes in non-controlling interests	—		—		(28)		—		—		—		1,567		1,539
Balance at June 30, 2021	59,909,344	$	6	$	65,856	$	—	$	(8,383)	$	(1,700)	$	4,522	$	60,301
Net loss	—		—		—		—		(17,645)		—		(2,503)		(20,148)
Other comprehensive loss	—		—		—		—		—		136		68		204
Issuance of common stock, net of issuance costs	3,905,324		—		9,410		—		—		—		—		9,410
Share based compensation	—		—		1,877		—		—		—		104		1,981
Other changes in non-controlling interests	—		—		(2,846)		—		—		—		6,614		3,768
Balance at September 30, 2021	63,814,668	$	6	$	74,297	$	—	$	(26,028)	$	(1,564)	$	8,805	$	55,516

Balance at January 1, 2022	63,925,334	$	6	$	75,743	$	—	$	(52,314)	$	(1,502)	$	5,881	$	27,814
Net loss	—		—		—		—		(15,452)		—		(2,222)		(17,674)
Other comprehensive income	—		—		—		—		—		102		4		106
Share-based compensation	—		—		882		—		—		—		73		955
Balance at March 31, 2022	63,925,334	$	6	$	76,625	$	—	$	(67,766)	$	(1,400)	$	3,736	$	11,201
Net loss	—		—		—		—		(54,366)		—		(1,109)		(55,475)
Other comprehensive loss	—		—		—		—		—		(167)		20		(147)
Issuance of common stock, net of issuance costs	14,388,000		2		158,200		—		—		—		—		158,202
Issuance of common stock upon conversion of debt	13,628,958		1		160,139		—		—		—		—		160,140
Issuance of common stock upon settlement of liability	945,626		—		11,111		—		—		—		—		11,111
Share-based compensation	—		—		784		—		—		—		54		838
Other changes in non-controlling interests	—		—		(8)		—		—		—		(4)		(12)
Balance at June 30, 2022	92,887,918	$	9	$	406,851	$	—	$	(122,132)	$	(1,567)	$	2,697	$	285,858
Net loss	—		—		—		—		(40,388)		—		(3,465)		(43,853)
Other comprehensive income	—		—		—		—		—		715		275		990
Share issuance costs	—		—		(229)		—		—		—		—		(229)
Share-based compensation	—		—		581		—		—		—		141		722
Other changes in non-controlling interests	—		—		—		—		—		—		—		—
Balance at September 30, 2022	92,887,918	$	9	$	407,203	$	—	$	(162,520)	$	(852)	$	(352)	$	243,488


	2022		2021
Operating activities
Net loss	$	(117,002)	$	(39,734)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation of property, plant and equipment		493		265
Amortization of intangible assets		2,240		2,381
Amortization of operating lease right-of-use-assets		454		509
Share-based compensation		2,515		2,919
Unrealized foreign exchange loss (gain)		1,384		(241)
Interest expense		1,542		613
Income taxes		1,084		(232)
Loss on revaluation of convertible debt		18,965		200
Loss on de-recognition of mineral interest		5,700		—
Loss on revaluation of investments		1,272		241
Share of loss of equity method investees		3,077		—
Other		1,353		186

Changes in other operating assets and liabilities:
Trade accounts receivable		(115)		1,074
Inventory		(263)		(1,013)
Operating lease liabilities		(615)		(548)
Accounts payable and accrued liabilities		4,019		4,061
Other operating assets and liabilities		(4,880)		(204)
Net cash used in operating activities		(78,777)		(29,523)

Investing activities
Purchase of mineral interests		(33,889)		(4,275)
Purchase of property, plant and equipment and intangible assets		(853)		(3,008)
Purchase of investments subject to significant influence		(3,601)		(870)
Other		—		(650)
Net cash used in investing activities		(38,343)		(8,803)

Financing activities
Net proceeds from issuance of common stock		159,320		9,408
Proceeds from Ivanhoe Electric convertible notes		86,200		48,621
Proceeds from VRB convertible bond, net of issuance costs		—		22,857
Net transfer from parent		—		23,152
Proceeds from subsidiary financings		—		5,317
Other		(12)		—
Net cash provided by financing activities		245,508		109,355

Effect of foreign exchange rate changes on cash and cash equivalents		(572)		(183)
Increase in cash and cash equivalents		128,388		71,029
Cash and cash equivalents, beginning of the year		49,850		9,341
Cash and cash equivalents, end of the period	$	177,666	$	80,187

Supplemental cash flow information
Cash paid for income taxes	$	558	$	498

Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock upon conversion of debt	$	160,140	$	—
Issuance of common stock upon settlement of liability		11,111		—
Settlement of loan from parent		—		5,886
Issuance of common stock in exchange for assets (Note 1)		—		65,654


	Carried at fair value				Equity method
	Sama		Fjordland		SNC		Total
Balance at December 31, 2021		5,719		1,325		657		7,701
Change in fair value		(245)		(876)		—		(1,121)
Investment		—		—		3,601		3,601
Share of loss		—		—		(3,077)		(3,077)
Foreign currency translation		—		(41)		(64)		(105)
Balance at September 30, 2022	$	5,474	$	408	$	1,117	$	6,999



	Santa Cruz		Tintic Project		Pinaya Project		San Matias		Mineral Royalty		Other		Total
Balance at December 31, 2021	$	35,075	$	19,588	$	2,511	$	13,607	$	1,708	$	550	$	73,039
Acquisition costs		11,252		5,788		—		—		—		350		17,390
De-recognition (Note a)		(5,700)		—		—		—		—		—		(5,700)
Foreign currency translation		—		—		15		—		—		—		15
Balance at September 30, 2022	$	40,627	$	25,376	$	2,526	$	13,607	$	1,708	$	900	$	84,744


	Series 1		Series 2		VRB
	Convertible		Convertible		Convertible
	Notes (Note a)		Notes (Note a)		bond (Note b)		Total

Balance at December 31, 2020	$	—	$	—	$	—	$	—
Debt issuance		48,621		—		22,857		71,478
Interest expense		—		—		483		483
Change in fair value		200		—		—		200
Balance at September 30, 2021	$	48,821	$	—	$	23,340	$	72,161

Balance at December 31, 2021	$	54,975	$	—	$	23,857	$	78,832
Debt issuance		—		86,200		—		86,200
Interest expense		—		—		1,541		1,541
Change in fair value		8,709		10,256		—		18,965
Conversion to common stock		(63,684)		(96,456)		—		(160,140)
Balance at September 30, 2022	$	—	$	—	$	25,398	$	25,398


	Three months ended				Nine months ended
	September 30:				September 30:
Revenue type	2022		2021		2022		2021
Software licensing (Note a)	$	2	$	—	$	6,713	$	—
Data processing services		552		1,043		832		3,993
Renewable energy storage systems (Note b)		627		2		627		106
Total	$	1,181	$	1,045	$	8,172	$	4,099


			Transactions for the		Transactions for the
			three months ended		nine months ended
	Balance outstanding as at		September 30,		September 30,
	September 30,	December 31,
	2022	2021	2022	2021	2022	2021
Total Expenses
Global Mining (Note a)	1,249	993	3,485	1,879	9,567	5,129
Ivanhoe Capital Aviation (Note b)	—	—	250	1,167	750	1,167
I-Pulse (Note c)	73	—	286	—	286	—
HPX (Note d)	—	—	—	—	—	487
Total	1,322	993	4,021	3,046	10,603	6,783
Advances
Global Mining (Note a)	1,757	1,855	—	—	—	—


	Three months ended				Nine months ended
	September 30:				September 30:
Project	2022		2021		2022		2021
Santa Cruz, USA (Note a)	$	21,811	$	2,166	$	46,372	$	2,600
San Matias, Colombia		6,000		3,576		11,773		10,400
Pinaya, Peru		297		164		2,448		882
Perseverance, USA		35		107		1,694		205
Yangayu, Papua New Guinea		831		—		1,482		—
Tintic, USA		613		547		1,309		1,589
Hog Heaven, USA		262		530		1,130		1,851
Carolina, USA		501		—		1,015		—
Bitter Creek, USA		92		181		600		249
Lincoln, USA		210		—		549		—
Ivory Coast Project, Ivory Coast		41		—		67		1,930
Project generation and other		3,278		2,683		6,718		4,857
Total	$	33,971	$	9,954	$	75,157	$	24,563


	Transactions for the		Transactions for the nine
	three months ended		months ended
	September 30,		September 30,
	2022	2021	2022	2021
Expense classification
General and administrative expenses	1,626	2,052	4,678	3,987
Exploration expenses	2,395	994	5,925	2,796
	4,021	3,046	10,603	6,783


	September 30, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets:
Investments subject to significant influence		5,882		—		—		7,044		—		—
Other investments		1,621		—		—		1,802		—		—
Total financial assets	$	7,503	$	—	$	—	$	8,846	$	—	$	—
Financial liabilities:
Convertible notes		—		—		—		—		—		54,975
Deferred consideration payable		—		—		—		—		—		26,562
Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	81,537


	Three months ended September 30, 2022								Nine months ended September 30, 2022
	Critical		Data		Energy				Critical		Data		Energy
	Metals		Processing		Storage		Total		Metals		Processing		Storage		Total
Revenue	$	—	$	554	$	627	$	1,181	$	—	$	7,545	$	627	$	8,172
Intersegment revenues		—		89		—		89		—		228		—		228
Loss (income) from operations		38,669		640		2,400		41,709		86,552		(3,956)		6,005		88,601
Segment Assets		267,548		6,542		20,712		294,802		267,548		6,542		20,712		294,802


	Three months ended September 30, 2021								Nine months ended September 30, 2021
	Critical		Data		Energy				Critical		Data		Energy
	Metals		Processing		Storage		Total		Metals		Processing		Storage		Total
Revenue	$	—	$	1,043	$	2	$	1,045	$	—	$	3,993	$	106	$	4,099
Intersegment revenues		—		56		—		56		—		100		—		100
Loss (income) from operations		15,630		185		2,548		18,363		33,770		(97)		4,863		38,536
Segment Assets		106,723		8,008		30,126		144,857		106,723		8,008		30,126		144,857


	Three months ended September 30,
	2022		2021
(In thousands)
CGI: Software licensing and data processing services:
Revenue	$	554	$	1,043
Cost of sales		(277)		(531)
Gross profit	$	277		512
VRB: Energy storage systems:
Revenue	$	627		2
Cost of sales		(598)		—
Gross profit	$	29		2
Total:
Revenue	$	1,181		1,045
Cost of sales		(875)		(531)
Gross profit	$	306		514


	Nine months ended September 30,
	2022		2021
(In thousands)
CGI: Software licensing and data processing services:
Revenue	$	7,545	$	3,993
Cost of sales		(444)		(1,091)
Gross profit	$	7,101	$	2,902
VRB: Energy storage systems:
Revenue	$	627	$	106
Cost of sales		(598)		(81)
Gross profit	$	29	$	25
Total:
Revenue	$	8,172	$	4,099
Cost of sales		(1,042)		(1,172)
Gross profit	$	7,130	$	2,927


Mineral Project	Commitment	2022		2023		2024		2025		2026-2032		Total
In $ thousands)
Santa Cruz (USA)	Discretionary	$	—		6,550		10,300		596	$	—	$	17,446
Santa Cruz (USA)	Non-discretionary		—		800		920		—		—		1,720
Total Santa Cruz (USA)			—		7,350		11,220		596		—		19,166
Tintic (USA)	Discretionary		—		5,288		—		—		—		5,288
Hog Heaven (Montana)	Discretionary		—		3,500		500		500		39,000		43,500
Ivory Coast (Ivory Coast)	Discretionary		—		—		—		—		7,762		7,762
South Voisey’s Bay (Canada)	Discretionary		—		—		4,416		—		—		4,416
Crystal Haven (Australia)	Discretionary		—		7,000		—		35,000		—		42,000
Unity (USA)	Discretionary		—		2,000		2,250		—		—		4,250
Cave & Lincoln (USA)	Discretionary		—		150		200		250		2,250		2,850
Carolina Mining (USA)	Discretionary		—		—		—		5,000		20,000		25,000
Total		$	—	$	25,288	$	18,586	$	41,346	$	69,012	$	154,232


	Currency by Denomination (in USD Equivalents)
			Canadian		Chinese
	US dollars		dollars		Renminbi		Other		Total
(In $ thousands)
Jurisdiction of Entity:
USA	$	159,733	$	582	$	—	$	—	$	160,315
Cayman Islands		9,398		9		—		—		9,407
Canada		3,046		2,654		—		—		5,700
China		—		—		1,607		—		1,607
British Virgin Islands		451		2		—		—		453
Other		62		1		—		121		184
Total	$	172,690	$	3,248	$	1,607	$	121	$	177,666


	Payments due by period (in thousands)
			Less than						More than
	Total		1 year		1-3 years		4-5 years		5 years
Long-term debt obligations (a)	$	24,000	$	—	$	—	$	24,000	$	—
Leases		1,347		353		991		2		—
Other long-term contractual liabilities (b)		363		—		363		—		—
Total contractual obligations	$	25,710	$	353	$	1,354	$	24,002	$	—


Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation of Ivanhoe Electric Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2022)
3.2		Amended and Restated Bylaws of Ivanhoe Electric Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2022)
10.1*		Employment Agreement dated October 21, 2022 between the Company and Taylor Melvin.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)



Date: November 14, 2022	By:	/s/ Robert Friedland
		Robert Friedland
		Chief Executive Officer
		(Principal Executive Officer)


Date: November 14, 2022	By:	/s/ Catherine Barone
		Catherine Barone
		Interim Chief Financial Officer
		(Principal Financial Officer)

/s/ Robert Friedland

Authorized Signatory

Title: Chairman and Chief Executive Officer

SIGNED by the Employee in the presence of:

/s/ Taylor Melvin

Taylor Melvin

/s/ Charles A. Cooley

Witness


Date: November 14, 2022
	By:	/s/ Robert Friedland
		Robert Friedland
		Chief Executive Officer


Date: November 14, 2022
	By:	/s/ Catherine Barone
		Catherine Barone
		Interim Chief Financial Officer